Socialist Action /October 1999
Why Capitalism Founders in Russia
By NAT WEINSTEIN
A scandal broke in the mass media on Aug. 19, when the Bank of New York
admitted to cooperating with money-laundering of some $4 billion to $10
billion swindled from the Russian people by Stalinist bureaucrats and capitalist
tycoons. (Russian bureaucrats and tycoons, more often than not, are the
same people.)
The fact is, however, that most, if not all, banks everywhere in the
capitalist world are in the money-laundering business. It is a most profitable
source of revenue for banks that exact a healthy fee for such services.
Thus, it suggests that the billions of dollars laundered by the Bank of
New York is only the tip of a very large iceberg.
The Economist, a London-based news weekly reflecting the views of British
capitalism, gives some evidence of this in an article reporting on Russian
money laundering, in which it says: "The paper trail has touched several
European banks too, all of which are said to have helped, over the past
year, to move $4 billion from Russia to the Bank of New York's London office."
(The Economist, like all other reports in the capitalist press, makes sure
to add, "All the banks deny wrongdoing.")
Further evidence pointing to a huge movement of Russian capital into
the personal accounts of unidentified Russians was reported in the Sept.
19 New York Times. The report stated that "since the collapse of Communism
in the Soviet Union, former citizens and their capital have flooded into
Switzerland and into its banks." The report goes on to say: "Though
there are no official figures, the Swiss authorities estimate that $40 billion
to $50 billion in Russian capital is deposited in Swiss banks."
There can be little doubt, however, that we are still merely observing
just a little more of the iceberg's tip. Other evidence, as we shall see,
suggests that the giant rip-off of Russian state property-the property of
the Russian people-may reach a multiple of the amount deposited in Swiss
banks.
Moreover, the likelihood is that similar evidence of mass plundering
by bureaucrats and capitalists will eventually be uncovered in China and
other degenerating workers' states in the former Soviet bloc countries.
Furthermore, it is even more likely that in time it will be revealed
that the finance and industrial capitalists in the major imperialist countries-with
the United States in the forefront-have garnered the lion's share of the
plunder from Russia.
In fact, as we shall see, the major force behind what is really a far
bigger and more destructive assault on the economies of Russia and other
degenerating workers' states has been masterminded by imperialism's financial
and industrial capitalists with American imperialism leading the marauding
pack of imperialist wolves.
Meanwhile, blame for the disintegration of the Russian economy has been
placed on the shoulders of what the media calls a "kleptocracy."
The term is clearly intended to hide the failure of capitalist restoration
in Russia and the resulting devastation of the country's economy, and blame
it all on a regime they claim is so corrupt, that a new term had to be invented.
(The term combines the Greek words, klepto, meaning "to steal"
and kratia, meaning to rule-hence, "kleptocracy.")
After all, this king-sized crime wave only began in earnest1 when the
openly pro-capitalist government of Boris Yeltsin-advised, aided, abetted
and financed by official representatives of American and world imperialism-began
its attempted forced march to transform Russia from a degenerating workers'
state into a capitalist state. No reasonably intelligent person with a modicum
of awareness of world events could believe that it occurred without the
knowledge and culpability of the political and financial representatives
of world capitalism.
The Times lets it all hang out
Shortly before the hue and cry about Russian bureaucrats and tycoons
laundering funds through the Bank of New York hit the headlines, the Sunday
magazine section of the Aug. 15 New York Times carried an in-depth report
headlined on its front page, "Who Lost Russia?" This was not the
first time that an authoritative mouthpiece of the capitalist class has
implied that the restoration of capitalism in Russia is failing or has failed,
but it is certainly the most dramatic.
Just a few quotations featured in this report tells why the movers and
shakers of world capitalism are agonizing over their failure to transform
Russia into a source of long-dreamed-of superprofits.
The article begins with this finger-pointing introduction: "The
country has spent the years since Communism spiraling downward. Who is to
blame? Great privations have been visited on the country in the name of
necessary sacrifice. Yet what has changed for the better?"
The author goes on to answer his own rhetorical questions with this damning
indictment of the attempt to impose capitalism on the Russian masses:
"Russians, free to get rich, are poorer. The wealth of the nation
has shrunk-at least that portion of the wealth enjoyed by the people. The
top 10 percent is reckoned to possess 50 percent of the state's wealth;
the bottom 40 percent, less than 20. Somewhere between 30 and 40 million
people live below the poverty line-defined as around $30 a month. The gross
domestic product has shrunk every year of Russia's freedom except one-1997-when
it grew, at best, by less than 1 percent."
John Lloyd, the author of this report, goes on: "Unemployment, officially
nonexistent in Soviet times, is now officially 12 percent and may really
be 25 percent. Men die, on average, in their late 50s; diseases like tuberculosis
and diphtheria have reappeared; servicemen suffer malnutrition; the population
shrinks rapidly."
Then the author zeroes in on who is really to blame. He writes:
"What the United States Treasury and the IMF were doing was financing
and licensing a Great Grab and calling it reform. And there was so much
in Russia to steal that was so precious: oil, diamonds, nickel. It was the
kind of opportunity that comes once in a millennium."
There it is-straight from the horse's mouth! While the Stalinist bureaucracy
and capitalist tycoons participated in the world-class rip-off, it could
not have happened without the assistance, advice, and direct participation
by the bipartisan United States capitalist government acting in the interests
of-and through the representatives of-American financial and industrial
corporations.
The Times reporter proceeds to describe how all American participants
in the process of self-enrichment in the course of their failed attempt
to create a market-driven capitalist economy, point the finger of blame
at each other. (A typical example of the aphorism: "Success has many
fathers, but failure is an orphan.")
The two political factions of the American capitalist class have already
begun to accuse each other as bearing major responsibility for the "loss"
of Russia. And since capitalist politicians never miss a chance to make
political hay to assure their own reelection, it promises to be a major
point of contention in the upcoming year 2000 presidential election.
Why capitalism failed to take hold
What about the hue and cry about money laundering and other illicit financial
transactions? It essentially serves the capitalist media as a diversion.
Rather than simply stating that capitalism failed to take hold in Russia,
and worse, has left the country's economy and the living standards of its
great majority in shambles, the money-laundering headlines serve as a whipping
boy. In other words, it's the fault of the so-called kleptocracy, not capitalism
or the capitalist class.2
The deeper question is touched on by The Times article discussed above.
But the source of the controversy among capitalists over "who lost
Russia?" and the attempted diversionary propaganda appear to be based
on a 100-page report by Clifford G. Gaddy and Barry W. Ickes titled: "Beyond
a Bailout: Time to Face Reality About Russia's 'Virtual Economy.'"
According to its publisher, the Brookings Institute Press, the report
has been "circulated among the highest levels of the Russian and U.S.
governments and has been reported in leading world publications" oriented
to such an audience. (The Brookings Institute, which sponsored the report
by Gaddy and Ickes, is an authoritative capitalist think tank.)
The two authors argue that Russia's economic system is something new.
They call the system now in place a "Virtual Economy." This is
an economy that they argue is based on "illusion or pretense about
nearly every important Russian economic category." They describe an
economy in which the prices of things-from raw materials to wages have little
connection with their real values-something alien to the laws of the capitalist
market.
The authors, Gaddy and Ickes, further describe the Russian economy this
way: "Over the past six years of 'radical reform,' Russian companies,
especially those in the core manufacturing sectors, have indeed changed
the way they operate. Only, they have not done so in order to join the market
but rather to protect themselves against it."
To put their thesis simply and clearly, they believe that capitalism
has failed to take hold in Russia, and the country has been devastated economically
and reduced to the worst of both Eastern and Western worlds. The authors
also argue that the Virtual Economy is "deep-rooted and enjoys strong
popular support."
However, it would be closer to the truth to say that given the terrible
reduction in the quality of life described by Gaddy, Ickes, and other bourgeois
analysts, the popular support could hardly be deep-rooted among those at
the bottom of the heap. Rather it appears to be a standoff in which neither
bureaucrats and capitalists on one side, nor workers on the other, have
gained the upper hand.
But to the extent that there is popular support for something in the
Russian economy, it is not for a so-called "Virtual Economy."
Rather it is for the halting, at least for the moment, of further pro-capitalist
"reforms" and further damage caused by accumulated "reforms."
In any case, the bottom line that comes through, independent of the authors'
intentions, is that the struggle over Russia's future-toward capitalism
or socialism-has yet to be decided!.
Nonetheless, in regard to their primary thesis, the authors are brutally
frank about the very dismal prospects for a successful transition to a market-driven
capitalist economy. They give very candid descriptions of Russia's industrial
and economic collapse since the Stalinist bureaucracy took the leap toward
capitalist restoration.
They report that in 1997, "the overall level of capital investment
in the economy's production sectors (industry, agriculture, transportation,
and communications) was 17 percent of what it was in 1990 [before the Soviet
Union was dissolved]. In the core manufacturing sector of metal-working
and engineering products, the volume of real spending on plant and equipment
in 1997 was no more than 5.3 percent of the 1990 level."
They describe how "enterprises don't pay their suppliers; they don't
pay their workers; they don't pay their taxes. While the nonpayment of taxes
and wages attracts media attention, it is in a sense not the real story.
Payments are being made, just not in actual money. The share of barter in
payments among all industrial enterprises in Russia is now above 50 percent.
Last year, 40 percent of all taxes paid to the Russian federal government
were in nonmonetary form."
In support of their thesis, the authors weigh very heavily the fact that
Russia's "largest companies conducted 73 percent of all their business
in the form of barter and other forms of nonmonetary settlement of debts."
It's hard to believe, however, that these very perceptive and informed
authors of "Beyond a Bailout..." cannot see what should be patently
obvious: It is the remaining social and economic conquests of the October
1917 Russian socialist revolution and the dogged resistance by workers to
the privatization of basic industry that has served as an objective barrier
to capitalist restoration.
In other words, despite all the inroads made in the state created by
the great October Socialist Revolution, the law of value that operates in
all capitalist countries does not operate in today's Russia.
Gaddy's and Ickes' thesis that a new type of social system now exists
in Russia, which they call a "Virtual Economy," seems to have
been advanced only for the purpose of making their case that Russia is far
from capitalism and that the strategy imposed by American and world imperialism
to reach that goal has definitely failed and any further efforts along those
lines should be stopped.
But they also admit to not having an alternative strategy to propose-beyond
stopping what life shows has not worked and, if continued, will only make
the inevitable consequences far worse.
Whither Russia?
From the point of view of those of us who are partisans of the struggle
for a socialist world, the more important question is: Can the Russian working
class find their way back to the struggle for world socialism advanced by
the Bolshevik Party of Lenin and Trotsky in 1919 with the launching of the
Third (or Communist) International as the world party of socialist revolution?
The struggle for a world socialist society is what revolutionary Marxism
is all about. And the Russian socialist revolution that occurred 82 years
ago was a giant leap forward toward that goal. It was a historic triumph
for the world working class and the human race as a whole.
But a socialist revolution in one country, and a backward one at that,
cannot achieve socialism by itself since socialism is predicated on the
expansion of the productive forces to at least the level achieved under
capitalism-and beyond. But without access to the world division of labor,
such an expansion of the productive forces, and thus, achieving the preconditions
for socialism, is impossible.
The reasons for the Soviet Union's failure to fulfill the promise of
the Russian Revolution of October 1917 is another story, too long to summarize
here. It must suffice for now to say that the main cause of the Soviet failure
to fulfill the promise of world socialism was the Stalinist bureaucratization
of the Soviet Communist Party and the Third International. Stalin had counterposed
to world socialism the program of "socialism in one country."
In reality, it led inexorably to the Stalinist policy of using the revolutionary
struggles of workers everywhere as a bargaining chip to offer imperialism,
in exchange for "peaceful coexistence" with world capitalism on
the basis of the preservation of the capitalist status quo.
The question before us today, however, is what are the prospects for
a revival of the struggle for world revolution in Russia and other degenerating
workers states-as well as in the capitalist world? The two questions are
organically interconnected and the solving of one advances the solution
of the other.
Contrary to accepted wisdom, we think that the prospects for world revolution
today are greater than ever before in the history of the world. But it must
also be said, that civilization and the human race has never been closer
to extinction than it is today-and the outcome lies in the balance!
Today, those of us that perceive the awesome challenge facing humanity,
and we consider the readers and supporters of this newspaper to be among
the vanguard of the movement for a socialist world, must dedicate ourselves
to a determined struggle for the realizable alternative of world socialist
revolution. And for that a mass revolutionary workers' party3, based on
the lessons of hundreds of years of class struggle experience, is indispensable.
Objective factors favoring world socialist revolution
Now in regard to the factors leading to our conviction that the world
has long been ripe for world socialist revolution and is on the brink of
a pre-revolutionary crisis more severe than the one that we know as the
Great Depression:
Already, the global capitalist economic chain is breaking apart at its
weakest links. The neo-colonial world of Africa, Asia, Latin America, and
the Middle East have been the first to experience a significant economic
decline, along with a concomitant reduction in mass living standards.
More evidence of an impending global economic collapse is registered
by the decades-long decline in the living standards of American workers.
And now workers in the strongest industrial countries of Europe are faced
with a mounting capitalist attack on their living standards as their economies
slow down, stagnate, and slide toward one or another form of the coming
social, economic, and political catastrophe.
Thus, because world capitalism has clearly entered a qualitatively deeper
stage of decay and has begun to be ever-more deeply wracked by social, economic,
political, and military crises, the objective conditions for socialist revolution
are ripening before our eyes.
And because this developing crisis is increasingly more unfavorable for
a successful transition to capitalism in Russia, China, and other such states,
that possibility now seems to be highly unlikely. And by the same token,
the prospects for world socialism are potentially the most favorable in
world history.
Reformist socialists and the Stalinized "Communists" had hegemony
over the world workers' movement when world capitalism entered the most
serious crisis of its history in the 1930s.
Revolutionary opportunities were lost that could and should have been
won. But the world working class failed to construct a revolutionary party
in time primarily because, while socialist reformism was largely discredited,
Stalinism appeared, falsely, to be the authoritative revolutionary representative
of the party that had led history's first socialist revolution-in opposition
to the reformists of its time, as well as to world capitalism.
But now that delusion has been shattered by Stalinism itself by its openly
unambiguous endorsement of the world capitalist status quo. Consequently,
Stalinism's declaration of political bankruptcy is the most favorable of
all factors favoring the victory of the working class and world socialism.
They have, thus, removed themselves as a principal obstacle to the construction
of a mass revolutionary socialist party!
This is not to say that the struggle will not be a long, hard, and difficult
one. No, the struggle will be those things and will inevitably include both
setbacks as well as victories. But the world working class is more than
equal to the task of fighting and winning the struggle for its own emancipation
from capitalist exploitation and oppression and by the same token the liberation
of the human race from capitalist barbarism and nuclear annihilation.
The history of working-class struggle shows that workers do indeed have
the power to defeat capitalism, but only if a mass revolutionary party-one
that has absorbed the lessons of battles lost and won-can be constructed
in time. That must be the goal of all those aware of the deadly alternatives
faced by the human race incorporated in the revolutionary Marxist watchwords,
Socialism or Barbarism!
1 The march toward the restoration of capitalism began in 1985, led by
Soviet president and Communist Party head Mikhail Gorbachev before the Soviet
Union was dissolved.
2 The term, kleptocracy, applies to capitalism, which is based on the
systematic expropriation of surplus value. Profit, in its strictest scientific
meaning, is the unpaid portion of the product of human labor systematically
but "legally" stolen by the capitalist class.
3 Socialist Action is an active proponent of the Fourth International
and its goal of becoming a mass world party of socialist revolution.
Socialist Action /October 1999 |